Peters, Grassley, Hassan & Ernst Bipartisan Legislation to Prevent Conflicts of Interest in Federal Contracting Advances in Senate

Bill Will Ensure Federal Contractors Are Working in the Best Interest of the American People

WASHINGTON, D.C. – Bipartisan legislation authored by U.S. Senators Gary Peters (D-MI), Chuck Grassley (R-IA), Maggie Hassan (D-NH), and Joni Ernst (R-IA) to help identify and mitigate potential conflicts of interest between taxpayer-funded projects and government contractors’ other business opportunities has advanced in the Senate. The federal government contracts with private companies to support important government functions – such as the delivery of services and the approval of prescription drugs. However, many contractors also conduct business with the private sector or other outside entities, and this can raise questions about the reliability of consultations, advice or projects under federal contracts. The legislation was approved by the Senate Homeland Security and Governmental Affairs Committee, where Peters serves as Chair.

“When private sector companies are working for the federal government – we need to know whether other parts of their business might conflict with the tasks they are performing for the American people. Unfortunately, federal contractors often fail to disclose this information – calling into question whether outside relationships could be influencing their taxpayer-funded work,” said Senator Peters. “This bipartisan, commonsense legislation will ensure federal contractors are working in the best interest of taxpayers without unnecessarily restricting their business relationships, and that federal agencies have upfront knowledge about private companies’ potential conflicts of interest before they are hired by the government.”

“Federal contractors are entrusted to provide critical goods and services to the federal government as it serves the American people. If we don’t know whether they are serving other, potentially conflicting interests, we can’t be confident that Americans are getting exactly what they pay for,” said Senator Grassley. “We’ve put together a good government bill that takes steps to eliminate these potential conflicts of interest to rebuild public trust in our contracting process,”

“Federal contractors like McKinsey have acted against the best interest of our country, communities, and citizens. Today, Congress took a step forward in advancing legislation to help address this behavior,” said Senator Hassan. “We saw how the substance misuse crisis was fueled, in part, because bad actors like Purdue Pharma benefitted from McKinsey’s willingness to engage in potential conflicts of interests between government regulators and the businesses they regulate. This bipartisan legislation will help ensure that federal contractors disclose any potential conflicts of interests so that the government and the American people get a fair shake.”

“Iowa taxpayers expect and deserve transparency for how their hard-earned money is being spent in Washington,” said Senator Joni Ernst. “This bipartisan measure shines light on how federal funds are being spent and will help crack down on any conflicts of interest for taxpayer-funded projects.”

Recent reports have highlighted the need to prevent conflicts of interest within companies that are awarded federal contracts. For example, McKinsey & Company, a management consulting corporation often hired by the federal government, was paid more than $140 million dollars since 2008 by the Federal Drug Administration (FDA) to help support their oversight work of pharmaceutical companies – including determining the safety and efficacy of prescription pain medications. At the same time, McKinsey had not disclosed to the FDA that they were also consulting for several opioid manufacturers on how these companies could effectively market their products. This has called into question whether consultants from McKinsey were providing biased advice to the FDA, and whether that advice was influenced by their relationship with the drug makers whose business practices are a root cause of the opioid epidemic. The senators’ legislation will give federal agencies a process to evaluate similar potential conflicts of interest to ensure that federal consultants and other contractors are using taxpayer dollars to work in Americans’ best interests.

The Preventing Organizational Conflicts of Interest in Federal Acquisition Act would require agencies to identify potential conflicts for specific contracts early in the process. Federal contractors would be required to disclose other business relationships with entities that conflict with the specific work that an agency has hired them to do. Private companies currently under contract with the U.S. government would also have to disclose new potential business that opposes ongoing services they are providing to the American people. The bill would ensure federal contractors are aware of disclosure requirements and how working with agencies could impact other parts of their business. Finally, the legislation requires federal agencies to assess and update their procedures for determining whether contractors could have a conflict of interest.

Below are statements in support of the senators’ bipartisan legislation:

“The U.S. government increasingly relies on government contractors for their expertise on matters that threaten our nation's safety and security. Yet, based on current federal contract regulations, agencies cannot always discern whether government contractors have business relationships with foreign governments and private entities that could create a conflict of interest,” said Noah Bookbinder, President of Citizens for Responsibility and Ethics in Washington. “To protect the integrity of services provided to the United States, CREW endorses the Preventing Organizational Conflicts of Interest in Federal Acquisition Act, which would require greater transparency in contractor business relationships in order to prevent conflicts of interest.”

“Companies perform mission-critical government functions. Organizational conflicts present one type of ethics risk to the government, and they must be identified and avoided through careful government oversight, said Scott Amey, General Counsel for the Project on Government Oversight. “Without more guidance, organizational conflicts of interest can result in unfair competitive advantages and biased contract awards—both of which compromise the impartiality of the federal government and the integrity of the contracting process.”

“When government policymaking is tainted by conflicts of interest, it weakens the legitimacy and credibility of the entire process. That erodes public confidence in government and harms democracy,” said Scott Greytak, Director of Advocacy for Transparency International U.S. “This bill promotes greater transparency and accountability to ensure the public can trust that government is making decisions with their best interests at heart.”

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